The Vulnerability of Ad-Based Business Models in Crisis Times (Full Transcript)

Speaker 1: G'day. Let's take a look at the vulnerability of the ad-based business model, and why that matters to you. Coca-Cola has just announced that they are suspending their social media advertising for a period of 30 days. Now, Facebook has taken a big hit as a result of this, that along with a bunch of other companies doing the same thing, essentially because it's a protest against Facebook and these platforms for not controlling the content enough, not banning negative and discriminatory type of content on the platforms. Now, as a result of that, Facebook's down about 8%, lost about $57 billion in market cap, and poor old Mark Zuckerberg has lost a couple of billion dollars out of his back pocket. Now, much as this is being touted as a protest against the platforms, the reality is they're probably also looking to save money, these big companies. They want to cut back on their advertising anyway. And I think what it's also doing is really exposing the vulnerability of these platforms that rely almost exclusively on an ad-based business model, which is Facebook. Companies like Microsoft and Amazon are doing okay because they have other products to sell. And the reason I think that's relevant to a lot of people is that in this current time, a lot of people are looking to find new ways to generate revenue, and so a lot of people are thinking, well, okay, maybe now I can become that sort of expert content creator. And how am I going to make money out of the content? Well, I'll just run ads. But at a time like this, when people are restricting their ad spend, it's even tougher. It was always super tough before. The reality of an ad-based business model, unless you're going to get really significant eyeballs and numbers and ear holes listening and watching your content, then it's going to be real hard to make any substantial money. That's why I've talked about sponsorships as opposed to advertising being a much better play. A better play even still is selling physical products. So if you're looking to find new ways to generate revenue right now, do not rely on ad-based business models. They're going to be super tough to get the eyeballs and the ear holes. That sounds rude, but it's not. And it's also going to be vulnerable. I think not just now in a time of crisis, but also heading out the other side of it. So just be aware that there is a vulnerability to the ad-based business model. Alrighty, that is it for today. I do thank you for your time, and I will be back again tomorrow. See ya.